NOMINATIONS COMMITTEE REPORT.


THE COMMITTEE

The Nominations Committee leads the process for the appointment of new directors to the Board and reviews on a regular basis the succession plans in place for executive directors and key senior management, board composition, the suitability of the directors standing for re-election at the Annual General Meeting and whether the Chairman and the non-executive directors continue to be able to meet their commitments to the Company.

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Members

 

John Stewart

Nick Prettejohn

Dame Clara Furse

Henry Staunton

Mike Fairey (from 1 May)

Julia Wilson (from 9 November)

Rudy Markham

James Strachan (until 25 May)

Stuart Popham (from 1 July)

Sir David Walker (until 25 May)

The Committee is chaired by the Chairman, and all non-executive directors are members of the Committee. Both Sir David Walker and James Strachan were members of the Committee prior to their retirement. Mike Fairey, Stuart Popham and Julia Wilson all joined the Committee on the respective dates of their appointments. The executive directors, as well as the Group General Counsel and Group HR Director, may attend meetings by invitation. The Committee is chaired by Henry Staunton, the Senior Independent Director, when it is considering matters relating to the Chairman. The Nominations Committee met formally seven times in 2011.

GROUP CHIEF EXECUTIVE SUCCESSION

Following the Company’s announcement that the Group Chief Executive intends to retire at the end of 2012, the Committee has met regularly to consider the plans for succession. This process is ongoing.

BOARD COMPOSITION IN 2011

During 2011, the Committee was active in the appointment of three new non-executive directors following the decision of Sir David Walker and James Strachan to stand down from the Board after serving nine and eight years on the Board respectively. Therefore, based on an assessment of the size of the Board and the balance of its composition, the Committee decided to seek three additional non-executive directors. The balance of skills, knowledge and experience on the Board was evaluated, and the Committee developed appointment specifications for the three positions. The Committee decided that the Board’s diversity of skills would be strengthened by the addition of Board members with knowledge of the insurance market, financial services, legal and accounting, tax or audit issues.

When developing the specifications, the Nominations Committee considered the importance of a diverse Board both in terms of thought, skills and experience and gender. The Committee instructed external advisers to assist in the identification and shortlisting of potential candidates. All Committee members, the Group Chief Executive and other executive directors met the shortlisted candidates and unanimously resolved to recommend to the Board the appointments of Mike Fairey, Stuart Popham and Julia Wilson, who each formally joined the Board as a non-executive director on 1 May, 1 July and 9 November respectively.

DIVERSITY

The Nominations Committee welcomes the recommendations made by Lord Davies, and believes that they mark a series of practical and achievable steps towards addressing the important issue of a stronger contribution by women in the UK’s boardrooms. The Nominations Committee considers the recommendations when contemplating the composition of the Board and the Company is working to further strengthen the representation of women among the non-Board senior management who may be the Board directors of tomorrow.

DIRECTORS’ TIME COMMITMENT

All directors may serve on a number of other Boards, provided they can demonstrate that any such appointment will not interfere with their time commitment to the Company and that they obtain the agreement of the Chairman to the appointment before accepting. Executive directors must also obtain the permission of the Group Chief Executive. This ensures that any potential conflicts of interest or any other concerns around the proposed appointment are considered and addressed. The major commitments of our non-executive directors are outlined in their biographies. Currently, non-executive directors are contractually obliged to commit circa 25 days per year. However, in practice their time commitment is significantly in excess of 25 days. The Chairman’s time commitment is two to two and a half days a week. The Committee remains satisfied that all non-executive directors have sufficient time to meet their commitments to the Company. The Committee evaluates the independence of any non-executive director serving over six years. All of the non-executive directors are considered to be independent and the Chairman was considered independent on appointment. The Committee was also satisfied that during 2011 the Chairman’s other commitments did not interfere with the day to day performance of his duties for the Company.

The Committee’s terms of reference can be viewed on our website.

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